Thursday, October 29, 2009

Wednesday, October 28, 2009

Monday, October 26, 2009

Treating trading as a business with the objectives, goals, and guidelines clearly laid out will not only help keep things organized, but allow for less emotional involvement during tough market conditions. Defined entry and exits need in place for when to take losses and profits. Protecting profits while limiting losses is the name of the game, remember the bottom line, we’re in this to make money.

Being diligent and thorough with your trading, and keeping detailed records will be a tremendous help and allow you to go back and really pick apart things the things that are working from the things that are not.

Finally decisive action is an important quality to have when developing as a trader. A good trader has trained his eye to spot potential forming trends. Often times when a clear trend is established it is already too late to enter in the trade. The business is trading and treating it as such will be the first step to becoming successful.

Sunday, October 25, 2009

We continue to chop sideways as earnings and economic news pours out. We have strong support at the $1075 level and resistance at $1100 on the S&P 500. Some positive economic news was answered by a decline on the market. With clearly defined support and resistant levels on the top line figures we have a good gauge of when to exit trades. We still remain in an uptrend and once that uptrend is broken we will think of taking a more bearish stance. Wecurrently remain cautiously bullish. It would make sense that we would continue up to at least the $1121 level on the S&P500 (50% Fibonacciretirement) as we continue to churn around the down trendline on the weekly chart.

Proceed with caution when putting on new trades this week. Lots of earnings and news will issue big whipsaws in the market. Watch for stocks that continue their trends throughout the news announcements this week as these will be the stocks that will act as relative strength and weakness once the earnings season is over.

We are in the midst of earnings season so don’t forget to doublecheck your stocks for individual news!

We are also in the middle of a bull flag pattern on the top-line figures. Take a look at the chart below to see our setup. A break of 1097 in the S&P500 is our breakout level and if we break down there is support at 1065 level.

Looking for continued bullishness this week as it is Option Expiry, we can begin to see the formation of an inverted head and shoulders pattern forming as well. The top line figures are knocking their heads on resistance however so pay attention to those longer time frames like weekly and monthly charts.

After a long rally, a pullback is finally upon us. The $1000 level is a strong psychological support level and we have identified the current daily trend as down due to the lower high on 9/29. We remain in an uptrend on the weekly however, so expect more volume to enter the market.

Opinions, hold them loosely.

The ability to change direction when trading is crucial to a trader's success. First, and most importantly you must identify the trend. Next, executing your trade according to your plan, and third, exit immediately when the market environment that you entered the trade on changes. Staying objective is much harder to do when you are in a trade, therefore having your plan written down in front of you will be greatly beneficial.

Thursday, October 1, 2009

Does it pay to Jump the gun? In most cases, No. Though there are times it is profitable, it is not highly probable. Catching the few cents or points ahead of the breakout or breakdown is not worth the risk that it entails. When entering a trade around a specific candlestick or pattern formation, it is in your best interest to wait for the breakout above or below the pattern such as a hammer before entering the trade.

In the case of Wednesday's candle formation, if you did go long in the morning, don't worry, that's perfectly okay, just make sure to have your risk defined, that is, "a stop below the low of the tail." Before taking any trade you MUST, MUST, MUST define your entry price, stop price, and profit target. This alone will greatly increase your probability of success.

Disclaimer:

Trading stocks and derivatives is risky. It is strongly recommended that you consult a licensed financial professional before taking any action to buy or sell. The information on this blog is for educational and reflective purposes only and is not intended to be financial advice. If you make or lose money in the stock market it is because you decided to place the trade and cannot be blamed on anyone else.